Chinese Premier Wen Jiabao Talks Like a Bold Reformer
  • Wed, 04/04/2012 - 19:10

By Dexter Roberts
April 04, 2012

What’s up with China’s Wen Jiabao? Just months before his retirement and after a decade serving as China’s top economic policy-maker, the premier is shaking up the already jittery status quo among the country’s rulers. And he’s doing it in that most sensitive of periods in China’s political life—the run-up to a Communist Party Congress, which will see a shift to a new generation of leaders, usually a time where caution, above all, is the byword.

First came his remarkable and likely last press conference, at the closing of the National People’s Congress last month. With an intensity of bearing suggesting he meant business, Wen launched into a spirited defense of the necessity of China’s continued economic reform, hearkening back to the Third Plenum of the 11th CPC Committee, a crucial meeting that launched the country on its modern-day path toward opening. More surprisingly, the 69-year-old premier also touted the need for political reforms, saying they must go hand in hand with economic ones—although he did not specify what those political reforms should entail.

But what really caught observers’ attention: Wen’s raised the topic of the decade-long tragedy of China’s Cultural Revolution, long a taboo subject, and warned its excesses could return.

“Reforms have reached a critical stage. Without the success of political reforms, economic reforms cannot be carried out. The results of what we have achieved may be lost. A historical tragedy like the Cultural Revolution may occur again. Each party member and cadre should feel a sense of urgency,” said the premier.

While his comments were no doubt directed at former Chongqing party secretary Bo Xilai and Bo’s promotion of “red culture” as well as his brutal methods in cracking down on crime, Wen also seemed to be issuing a warning to China’s future leaders: Detour too far from the road of reform, and China could careen off its present path of continued development.

Wen seemed to be suggesting, too, that the danger was more real now than ever. And that is a growing fear for many, as opposing visions for China’s future seem increasingly at war: On the one hand is what some have dubbed the Guangdong Model, after China’s southern province, with its emphasis on gradual grassroots reform of civil society and continued market-freindly reforms; and on the other is the Chongqing Model with its more tightly controlled, government-led economic development.

The latest Wen surprise: his call, made in a broadcast April 3 on state-run China National Radio, for a breakup of the monopoly of China’s state-owned banks, saying it is crucial that the financing system start to serve private and smaller companies more fairly rather than just cater to the giant state-owned corporations. “Let me be frank. Our banks earn profit too easily. Why? Because a small number of large banks have a monopoly,” Wen said. That echoes a call made earlier this year by the World Bank and the Development Research Center of the State Council, China’s cabinet, which argued that foot-dragging on financial reform is choking off China’s economic vitality.

International economic bodies are expected to advocate such dramatic change, but Wen’s usually blunt criticism of the financial system that underpins party control of China’s economy—where state-owned banks distribute largesse to state-owned companies—was unusual for a top party leader, to say the least.

Is this burst of rhetoric a last-gasp attempt by Wen to burnish his name as a reformer? That’s what some think who argue Wen’s calls are too little and too late and have limited power to influence real policy-making as the premier prepares to step down.

Maybe so. But lame duck or not, Wen may well end up ratcheting up the pressure on those set to take over power later this year, including likely successor Li Keqiang and next president Xi Jinping. Wen’s calls are putting needed attention on crucial issues confronting China as it struggles to find its way forward.
Roberts is Bloomberg Businessweek's Asia News Editor and China bureau chief.